Taxation 1

Question 1 Jared Gill was camning a salary of RM12,000 per month and he retired from Taxis Berhad (Taxis) on 30 September 2021 at the age of 48 due to ill health after having worked with the telecommunications company for 13 years. He received a gratuity of RM90,000 which he used to set up a mobile phone retail business on 1 November 2021. Just before retiring, he underwent an elbow ligament surgery at the Singapore Health Centre in July 2021. The surgical and medical expenses incurred amounted to RM100,000 of which RM75,000 was paid by Taxis. His wife, Carla Gill camed RM6,000 per month teaching part-time at Sunway College in Kuala Lumpur. During her spare time, she translated literary works for the Ministry of Education, Malaysia as well as performed in cultural shows organised by the Ministry of Culture, Arts and Tourism, Malaysia. Carla travelled often to Mumbai, India to visit her aged parents and in 2021, she was not a resident for income tax purposes under section 7 Income Tax Act 1967. Jared and Carla have 3 children, Ray, Orca and Anemone. Ray, aged 21, is pursuing engineering at Brisbane University in Australia and the annual cost of maintaining him was RM60,000. Orca, aged 13, studies at a secondary school in Subang Jaya and Anemone, aged 20, is physically handicapped and is pursuing a business degree in University Malaya. Jared Gill has provided the following additional information in respect of the year ended 31 December 2021 for both his wife and himself- Jared RM 60,100 Carla RM 3,200 2.800 2,080 1.700 80,000 2.100 50,000 1.800 4,200 Adjusted Business Loss sec 44(2) EPF Employer's portion Employee's portion Insurance Capital sum insure Premium paid Leave passage provided by employer Overseas 2 local trips Children's maintenance expenses Ray Orca Anemone Medical expenses incurred in respect of Jared Gill's parents Carla Gill's parents Donation to approved institutions 5,000 60,000 8,000 22,000 1,700 7.000 Page 1 of 3 3,000 600 4,000 Computer (worth) Cash Dividend income Digi Bhd (Single Tier System) Translation fees received from Ministry of Education Interest from RM120,000 savings account each in Public Bank Berhad 19,320 37,300 12,200 4,200 4,200 (i) Required: Compute the income tax payable, if any, by Jared and Carla for year of assessment 2021. Carla did not elect for joint assessment under section 45(2) of the ITA. It is assumed that all child reliefs are to be given to Jared under section 48(1) Income Tax Act 1967. (22 marks) (ii) List three (3) benefits of Jared and Carla opting for separate assessment instead of joint assessment. (3 marks) Question 1 Jared Gill was camning a salary of RM12,000 per month and he retired from Taxis Berhad (Taxis) on 30 September 2021 at the age of 48 due to ill health after having worked with the telecommunications company for 13 years. He received a gratuity of RM90,000 which he used to set up a mobile phone retail business on 1 November 2021. Just before retiring, he underwent an elbow ligament surgery at the Singapore Health Centre in July 2021. The surgical and medical expenses incurred amounted to RM100,000 of which RM75,000 was paid by Taxis. His wife, Carla Gill camed RM6,000 per month teaching part-time at Sunway College in Kuala Lumpur. During her spare time, she translated literary works for the Ministry of Education, Malaysia as well as performed in cultural shows organised by the Ministry of Culture, Arts and Tourism, Malaysia. Carla travelled often to Mumbai, India to visit her aged parents and in 2021, she was not a resident for income tax purposes under section 7 Income Tax Act 1967. Jared and Carla have 3 children, Ray, Orca and Anemone. Ray, aged 21, is pursuing engineering at Brisbane University in Australia and the annual cost of maintaining him was RM60,000. Orca, aged 13, studies at a secondary school in Subang Jaya and Anemone, aged 20, is physically handicapped and is pursuing a business degree in University Malaya. Jared Gill has provided the following additional information in respect of the year ended 31 December 2021 for both his wife and himself- Jared RM 60,100 Carla RM 3,200 2.800 2,080 1.700 80,000 2.100 50,000 1.800 4,200 Adjusted Business Loss sec 44(2) EPF Employer's portion Employee's portion Insurance Capital sum insure Premium paid Leave passage provided by employer Overseas 2 local trips Children's maintenance expenses Ray Orca Anemone Medical expenses incurred in respect of Jared Gill's parents Carla Gill's parents Donation to approved institutions 5,000 60,000 8,000 22,000 1,700 7.000 Page 1 of 3 3,000 600 4,000 Computer (worth) Cash Dividend income Digi Bhd (Single Tier System) Translation fees received from Ministry of Education Interest from RM120,000 savings account each in Public Bank Berhad 19,320 37,300 12,200 4,200 4,200 (i) Required: Compute the income tax payable, if any, by Jared and Carla for year of assessment 2021. Carla did not elect for joint assessment under section 45(2) of the ITA. It is assumed that all child reliefs are to be given to Jared under section 48(1) Income Tax Act 1967. (22 marks) (ii) List three (3) benefits of Jared and Carla opting for separate assessment instead of joint assessment